UK Tax strategy
Donna Karan Group - UK Tax Strategy
This web page sets out the tax strategy of all Donna Karan UK entities and by making this strategy available the Donna Karan Group is fulfilling its responsibilities under paragraph 16 of Schedule 19 of the Finance Act 2016. The entities that this tax strategy applies to are as follows:
Donna Karan Company Stores UK Holding Limited
Donna Karan Company Stores UK Retail Limited
Donna Karan Management Company UK Limited
Donna Karan Company Store (UK) Limited
For the purposes of this page they will be referred to as the ‘UK Sub-Group’. All group companies in the UK have the same tax strategy and approach to risk, therefore a single tax strategy has been provided.
This tax strategy is owned and was approved by the Directors of Donna Karan Company Stores UK Holding Limited on behalf of the UK Sub-Group on January 28th 2019. This paper will be reviewed on annual basis and any proposed changes will be discussed and approved by the Directors of Donna Karan Company Stores UK Holding Limited on behalf of the UK Sub-Group.
How the UK Sub-Group manages their UK tax risks
The UK Sub-Group is part of a Multi-national group (G-III Apparel Group Ltd) which understands that effective risk management is paramount to an overall strategy which results in continued growth and profitability for the ultimate shareholders. The group is aware that in some cases, risk cannot be entirely eliminated, but it can be minimized to an acceptable level where it becomes manageable. Controls are in place to monitor and minimize all risks to the business, especially those relating to tax.
Ultimate responsibility for the tax affairs of the UK entities sits with the UK Sub-Group’s board of directors. However, they will report their tax position, and are provided with guidance and assistance from the rest of the Multi-national group.
The day-to-day management of tax matters rests with the Group’s financial management team, which can be assisted by UK tax advisors and professional accountants who are experts in their respective fields. The UK Sub-Group is also supervised by the tax team of the ultimate parent, G-III Apparel Group Ltd.
The corporation tax returns of the company are prepared by our external UK tax compliance providers and are based on information supplied by the UK Sub-Group. These are reviewed and approved by the Directors of the UK-Sub-Group prior to submission to HMRC.
Where there are areas of uncertainty or higher complexity in relation to a risk (e.g. a disposal of assets), advice will be sought from the UK Sub-Groups external tax advisors to ensure that the tax issue is appropriately dealt with, however, full ownership of the final UK tax position remains with the entities within the UK Sub-Group.
The UK Sub-Group’s attitude to UK tax planning
The UK Sub-Group recognises that is has a responsibility to pay an appropriate amount of tax in the jurisdiction in which it operates and we only use legitimate tax reliefs, deductions and incentives for the purposes they were intended for. We aim to balance this with our responsibility to our ultimate shareholders and clients to structure our affairs and their dealings in an efficient manner. We will also not undertake tax planning where it is likely to be considered aggressive by HMRC and other tax authorities. Any planning that is undertaken will be fully disclosed to the relevant tax authority and agreed beforehand with the Group’s tax advisers. We will seek external tax advice in certain situations, for example:
in respect of large, one off transactions such as business acquisitions or disposals, to ensure that we do not suffer any unforeseen or unreasonable tax outcomes;
in areas where we may have insufficient internal expertise; and
as a second opinion in cases where we believe there is uncertainty with respect to the application of tax law, although we may also approach HMRC directly, to seek clarity or obtain clearance.
The overall approach to tax planning is a low risk, non-contentious attitude to tax planning in the UK.
The UK Sub-Group’s UK tax risks
The UK Sub-Group is not prepared to accept anything other than immaterial levels of risk in respect of the application of UK legislation. The UK Sub-Group does not engage in artificial tax schemes and makes use of the expertise of external tax advisers to manage its tax risk exposure. Tax legislation is often complex and subject to interpretation. Consequently, if uncertainty arises in relation to a significant or complex tax position, the Company may seek to minimize any uncertainty by entering a dialogue with HMRC.
The UK Sub-Group and working with HMRC
We engage openly and constructively with HMRC on matters relating to our tax affairs. The UK Sub-Group previously had a designated HMRC Customer Relationship Manager (CRM) and an internal Senior Accounting Officer. Changes to the ownership and a lower level of UK operations of the new Multi-national group meant these are no longer required but the UK-Sub Group continues to work with HMRC in a transparent, collaborative and proactive way and complies with agreements with HMRC on transfer pricing issues.
We actively engage with our tax advisers on a real time basis on any material tax points to the UK Sub-Group and any areas of uncertainty on interpreting UK tax law are discussed with them in advance. The strategic aim is to avoid unnecessary disputes with HMRC and thus minimize tax risk.